How can I make a rounded indentation on a cylinder?
Though you may do it using Boolean Modifier (or BoolTool add on) the good solution here may be using an Inset tool since it'll allow you to make a clean topology mesh.


Add a cylinder with 16 subdivisions. Add edge loops Ctrl+R to define the indentation position. Select the faces representing the indentation and press I,B (to enable Boundary mode). Repeat it twice (to create the extra edge loops for subsurf creasing). Extrude it inwards (E), then inset again as before.


Add the additional edge loops to the indent, then form its shape transforming some vertices. Finally fill the top part of the cylinder with mesh (example topology pictured in the first .jpeg).